Friday, January 9, 2009

Just wanted to pass along a discount on Quicken products. From now until January 25th, Quicken is giving a $20 discount. That includes Quicken Deluxe, Quicken Premier, Quicken Home & Business, and Quicken Rental Property Manager. The offer expires in a few weeks so make sure to take advantage of it: Quicken $20 discount.

"The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the second world war at intervals ranging from four to 10 years.

However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years."

Also, an excerpt from one of his recent articles 'The Crisis & What to Do About It,' from last month (early December):

"The salient feature of the current financial crisis is that it was not caused by some external shock like OPEC raising the price of oil or a particular country or financial institution defaulting. The crisis was generated by the financial system itself. This fact—that the defect was inherent in the system —contradicts the prevailing theory, which holds that financial markets tend toward equilibrium and that deviations from the equilibrium either occur in a random manner or are caused by some sudden external event to which markets have difficulty adjusting. The severity and amplitude of the crisis provides convincing evidence that there is something fundamentally wrong with this prevailing theory and with the approach to market regulation that has gone with it. To understand what has happened, and what should be done to avoid such a catastrophic crisis in the future, will require a new way of thinking about how markets work."

Thursday, January 8, 2009

This is the 3rd Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F filings here.

Next up is Jim Simons' Renaissance Technologies, ranked 4th in Alpha's 2008 hedge fund rankings. Rentec, as they are commonly known, was started by Simons in 1982 and has around $25 billion in assets total. They employ mathematical and statistical methods to execute their investments and trades. Their flagship $7 billion Medallion fund has averaged annual returns around 35%. Unlike most hedge funds which charge a flat 2% management fee on assets and then a 20% performance fee, Medallion charges a 5% management fee and a performance fee > 40%. The fees are high, but after seeing their returns, one could argue it is easily worth it. Medallion finished up 80% for 2008, as noted in our hedge fund year end performance post. The bad news to anyone reading is that the fund is pretty much limited to only former and current Renaissance employees. Simons other funds, which are open to other investors, were both down in '08.

Disclaimer: Do note that tracking Rentec through 13F filings is not beneficial at all due to the quant nature of their firm. We are tracking them because they are a popular, prominent fund with solid returns and many readers requested it just for fun. Use this information for entertainment purposes only. Again, they are mainly a quant firm and they trade every asset under the sun. The majority of equity holdings you will see in their portfolio are most likely from their Institutional Equities Fund. Please keep this info in mind when viewing below. We don't want anyone doing anything stupid simply because they were unaware of Rentec's background.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Some Increased Positions (A few positions they already owned but added shares to)Costco (COST): Increased position by 2,030%Apple (AAPL): Increased position by 1,650%Freeport McMoran (FCX): Increased position by 1,029%Wrigley (WWY): Increased position by 496%General Dynamics (GD): Increased position by 258%Amgen (AMGN): Increased position by 192%DirecTV (DTV): Increased position by 90%Gilead Sciences (GILD): Increased position by 65%Honeywell (HON): Increased position by 44%Eli Lilly (LLY): Increased position by 32%Apollo Group (APOL): Increased position by 22.5%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)Berkshire Hathaway Class A (BRK-A): Reduced position by 50%Colgate Palmolive (CL): Reduced position by 30%AstraZeneca (AZN): Reduced position by 29%Paychex (PAYX): Reduced position by 15%Nationwide Financial Services (NFS): Reduced position by 14.5%Philippine Long Distance (PHI): Reduced position by 14%Walmart (WMT): Reduced position by 11%GlaxoSmithKline (GSK): Reduced position by 10%

Assets from the collective long US equity, options, and note holdings were $43.9 billion last quarter and were $37.1 billion this quarter. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, private equity, etc). This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

'Tiger Cub' Paul Touradji and his Touradji Capital are set to launch another fund. Their flagship Global Resources fund was up 10% for the year through November and the firm currently manages $3.5 billion. Recently, at a 'Tiger Cub' hedge fund manager panel, Touradji advocated shorting Copper as the world deleverages and the velocity of money drops. We have detailed the changes in Touradji's portfolio holdings here.

Wednesday, January 7, 2009

This is the 3rd Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F filings here.

Next up is Tontine Associates. Founded 11 years ago, Tontine is a $6 billion firm ran by Jeffrey Gendell. Gendell graduated from Duke and worked in Corporate Finance for Smith Barney. He specializes in macro investing and takes very large, concentrated positions in companies he feels will benefit from those macro themes. Additionally, he will take on an activist role when necessary, to ensure shareholder returns. The fund has posted returns in excess of 100% in both 2003 and 2005. Conversely, this year has been the year from hell for Tontine. Recently, they announced they would be closing two of their hedge funds: Tontine Capital LP and Tontine Capital Partners LP. Two of Tontine's funds will remain open: Tontine-25 and Tontine Financial. Tontine was -65.7% for the month of October and was -76.8% for the year at that time, as we noted in our post on hedge fund performance numbers. It has definitely been an astonishing year for Gendell, whose Tontine firm is named after an annuity invented by Lorenzo de Tonti. In such an annuity, investors contribute and collect dividends. As investors each die off, their share is left to the remaining partners. Therefore, the last man alive receives all the money. Gendell's desire is clearly to be that 'last investor' remaining. Such a goal becomes slightly ironic when you consider his firm suffered monumental losses and almost 'died' this year. Gendell explains the turmoil they faced in his October letter to investors (.pdf format).

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Some New Positions(Brand new positions that they initiated in the last quarter):Navistar (NAV)Ultra Financials ETF (UYG)OM Group (OMG)General Cable (BGC)Myr Group (MYRG)Mainsource Financial (MSFG)Marshall & Isley (MI)First Horizon (FHN)First Midwest (FMBI)Summit Financial (SMMF)National City (NCC) Calls

Some Increased Positions (A few positions they already owned but added shares to)Emcor (EME): Increased position by 44.5%Perini (PCR): Increased position by 33%AK Steel (AKS): Increased position by 30%Graftech (GTI): Increased position by 19%Citigroup (C) Calls: Increased position by 11%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)Foster Wheeler (FWLT): Reduced position by 50%Goodyear Tire & Rubber (GT): Reduced position by 32%KBR (KBR): Reduced position by 28%Cliffs Natural Resources (CLF): Reduced position by 23.5%DST Systems (DST): Reduced position by 22%Quanta Services (PWR): Reduced position by 18%Trinity Industries (TRN): Reduced position by 18%Trueblue (TBI): Reduced position by 16%Shaw Group (SGR): Reduced position by 15%AMR (AMR): Reduced position by 13%A.O. Smith Corp (AOS): Reduced position by 13%

Assets from the collective long US equity, options, and note holdings were $10.6 billion last quarter and were $6.5 billion this quarter. They saw a massive drop-off in collective assets mainly due to poor performance. It is also worth mentioning that ever since the 13F filing has come out, Tontine has been active in filing various 13D and 13G forms which detail changes in their ownership of various companies listed above. We will also be covering these position adjustments over the next few days so that everything ties into a cohesive whole. Additionally, Tontine has been seeking options for positions in which they are the largest shareholder, including: Miscor Group Ltd (MIGL), Broadwind Energy (BWEN), Exide Technologies (XIDE), Neenah Enterprises Inc (NENA), Integrated Electrical Services Inc (IESC), Patrick Industries (PATK), Innospec Inc (IOSP), and Westmoreland Coal Co (WLB). Tontine has had a hectic year, to say the least. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, private equity etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

Over on TheStreet.com, notable trader Eric Bolling has posted up his latest piece. He's bullish on commodities and writes,

"And then, wow, it hit me like an ice cold shower. We are headed for a period of serious inflation with all the stimulus (free money) we are pumping into our economy. The dollar will be dramatically devalued and the reflation of the U.S. economy will happen, in a big way! Watch oil, gold and agricultural commodities soar in the coming years. With cheap and free dollars pumped into the system, the value, or buying power of those dollars, has to drop. The things we buy with dollars will increase in price just to keep up with the devaluing currency that is traded for it. And toss in a recovery and rebound in demand, you have the makings of a serious price recovery."

...

In energy related stocks and ETFs, I own U.S. Oil Fund (USO), El Paso (EP), and Quantum Fuels (QTWW). In metals, I own iShares Silver Trust (SLV) and SPDR Gold Shares (GLD). And finally, I bought PowerShares DB Agriculture (DBA) as the agricultural commodities have fallen with the rest of the dollar-based commodities. Much of the timing of this trade relies on the length of the current recession. It is possible that this trade may take months to open up. If the global economy struggles, so will this trade, so either have a longer-term horizon or trade smaller. I am in this for the long haul. At lower oil prices, I like the trade even more.

...

I am more convinced than ever that if you have a 12- to 18-month time horizon, there are amazing opportunities out there in commodities."

Regarding crude oil, we definitely agree with him and have been trading around it with the gyrations, while maintaining a core position all along. Longer-term, we see this as an excellent area to accumulate oil. The supply picture is and will continue to dwindle going forward. In terms of agriculture, we've also been getting constructively bullish, but still think it is a little early to touch this one. However, legendary investors and ex-hedge fund managers of the notable Quantum Fund, Jim Rogers and George Soros have both proclaimed their bullishness on agriculture. Rogers thinks that commodities will be in a bull market for years to come and have unimpaired fundamentals. Soros is equally as bullish and has also been accumulating a lot of Potash (POT).

In addition to TheStreet.com, Eric Bolling posts over on Twitter. On Monday night (1/5) and again Wednesday morning (1/7), Bolling noted that he,

"Trimmed (United States Oil Fund USO position) by 1/3....another 1/3 a bit higher and last 1/3 hold for the run up. will buy all sales back on a (Crude Oil) $45 pullback...under $45 I like it. I will scale down from $45 to $35 "

"I talked about this trade on Happy Hour last night. Long $PL short $GC long platinum short gold spread trade. I put it on yest(erday)."

You can follow Eric's twitter here and our twitter updates here. Make sure to check out the entirety of Eric's piece on TheStreet.com. Lastly, if you've missed it, you can check out some of Eric's other recent commentary here.

Tuesday, January 6, 2009

This is the 3rd Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F filings here.

Next up, we have Harbinger Capital, a $13 Billion firm ran by Philip Falcone. Harbinger was started in 2000 with seed capital from Harbert Management ($25 million). And, just recently, we've learned that Falcone is buying out Harbert to be the owner of the firm. Falcone made a name for himself in 2007 when he started shorting subprime mortgages and returned 117%. He focuses on intensive credit research, on bankruptcies and proxy fights, and was previously involved with high yield debt trading. Lately, he's been focused on equities it seems, but his new fund has redirected his focus back to his roots.

At one point during this year, they were up as much as 42%. But, their fortunes turned as they found themselves -13% for the year as of October, as we noted in our hedge fund performance numbers post. One position that treated them nicely was their short of Wachovia (WB), which we detailed here. Back in September, in a letter to investors, Falcone had assured investors that Harbinger was adequately positioned to stave off any further volatility the markets may bring their way, noting that the firm had reduced exposure to some of their higher volatility holdings (both on the long and short side). They have been very proactive in managing their portfolio this year, as evidenced by their Q2 portfolio. For more on the manager of Harbinger, then head over to our post about Philip Falcone.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Some New Positions(Brand new positions that they initiated in the last quarter):Navistar (NAV)United States Oil Fund (USO) PutsConstellation Energy (CEG)Alpha Natural Resources (ANR)Seracare Life Sciences (SRLS)Bank of Montreal (BMO)Owens Corning (OC-WS-B) Warrants BGreen Builders (GBH)

Some Increased Positions (A few positions they already owned but added shares to)Ultrashort S&P 500 ETF (SDS): Increased position by 150%Ultrashort Dow30 ETF (DXD): Increased position by 150%Cablevision (CVC): Increased position by 111%Solutia (SOA): Increased position by 69%Nicor (GAS): Increased position by 31%Medivation (MDVN): Increased position by 12%Calpine (CPN): Increased position by 5%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)Northwest Airlines (NWA): Reduced position by 99%Ashland (ASH): Reduced position by 94%Cablevision (CVC) Calls: Reduced position by 60%Ultrashort Financials ETF (SKF): Reduced position by 50%Southern Union (SUG): Reduced position by 37%Hughes Communications (HUGH): Reduced position by 20%Mirant (MIR): Reduced position by 8%

Assets from the collective long US equity, options, and note holdings were $9.3 billion last quarter and were $4.8 billion this quarter. As you can see, Harbinger decreased long equity and options exposure pretty significantly. They completely sold out of numerous previous top holdings of their firm. They sold completely out of Freeport McMoran (previously 11% of their firm's holdings), AK Steel (previously 8% of their firm's holdings), and Sprint Nextel (previously over 6% of their firm's holdings). So, they were unloading some very large positions. It is also worth mentioning that ever since the 13F filing has come out, Harbinger has been active in filing various 13D and 13G forms which detail changes in their ownership of various companies listed above. We will also be covering these new position details over the next few days so everything ties into a cohesive whole. After all, Harbinger has changed up their portfolio quite a bit over the course of the year. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, private equity etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

Want to give a hat tip to TraderMark over at Fundmymutualfund.com for assembling this list. 2008 was a chaotic year, to say the least. And, with indexes down huge on the year, there weren't many rays of light in the abyss known as the 2008 stock market. The following though, is a list of some of best performing stocks for the year of 2008:

Monday, January 5, 2009

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.

Next up, we have Thomas Steyer's Farallon Capital Management. Steyer founded the firm in 1986 and still manages it today. Steyer graduated from Summa Cum Laude from Yale University and received his MBA from Stanford's Graduate School of Business. Prior to founding Farallon, Steyer worked as an analyst in Morgan Stanley's Mergers & Acquisitions department and then as an associate in the risk arbitrage department of Goldman Sachs. Being so well versed in the area of risk arbitrage, Steyer employs similar strategies at Farallon. Farallon invests in both public and private debt, equities, private investments, and real estate. For the year of 2008, Farallon was ranked 3rd in Alpha's hedge fund rankings. Farallon is a $30 billion firm and has recently suspended withdrawals from their largest fund after receiving redemption requests for around 25% of the fund's capital. The fund won't be charging typical management and performance fees, but instead will charge accounting fees. Farallon's recent portfolio performance is available here. Additionally, you can also read one of their recent investor letters. Lastly, you can check out this profile on Steyer for more information on him and his firm.

The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Some Increased Positions (A few positions they already owned but added shares to)Ishares Emerging Markets ETF (EEM) Puts: Increased position by 220%Mastercard (MA): Increased position by 81%Burlington Northern (BNI): Increased position by 49%Research in Motion (RIMM): Increased position by 42%Netapp (NTAP): Increased position by 15%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)Fidelity National Information (FIS): Reduced position by 54%Qualcomm (QCOM): Reduced position by 49%JB Hunt Transport (JBHT): Reduced position by 47%Sherwin Williams (SHW): Reduced position by 46%Marriott (MAR): Reduced position by 45%Oracle (ORCL): Reduced position by 38%America Movil (AMX): Reduced position by 37%Ishares Russell 2000 (IWM) Puts: Reduced position by 35%Amylin Pharma (AMLN): Reduced position by 35%Ishares Biotechnology ETF (IBB) Puts: Reduced position by 31%Cablevision Systems (CVC): Reduced position by 29%Sealed Air (SEE): Reduced position by 25%Hospira (HSP): Reduced position by 24%Gilead Sciences (GILD): Reduced position by 22%Apple (AAPL): Reduced position by 20%Sandridge Energy (SD): Reduced position by 14%

Assets from the collective long US equity, options, and note holdings were $5.8 billion last quarter and were $3.69 billion this quarter. As you can see, Farallon decreased long equity and options exposure pretty significantly. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, private equity etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

Noted short-seller and hedge fund manager Doug Kass has recently published his annual list of Surprises for the coming year over on TheStreet.com. What's interesting is that he has been getting better over time in terms of accuracy. One third of his surprises came true in 2003, nearly 50% of them were true in 2004, nearly 50% were true for 2007, and 60% of his 2008 surprise predictions came true. Now that we're in 2009, we thought it was appropriate to highlight some of the major ones.

"Old, leveraged media implode. The worlds of leverage and old media collide in a massive flameout of previous leveraged deals. Univision and Clear Channel go bankrupt. The New York Times (NYT) teeters financially.

State and municipal imbalances and deficits mushroom. The municipal bond market seizes up in the face of poor fiscal management, revenue shortfalls and rising budgets at state and local levels. Municipal bond yields spike higher. A new Municipal TARP totaling $2 trillion is introduced in the year's second half.

Mutual fund redemptions from 2008 reverse into inflows in 2009. The mutual fund industry does not suffer the same fate as the hedge fund industry. In fact, a renaissance of interest in mutual funds (especially of a passive/indexed kind) develops. Fidelity is the largest employer of the graduating classes (May 2009) at the Wharton and Harvard Business Schools; it goes public in late 2009 in the year's largest IPO. Shares of T. Rowe Price (TROW) and AllianceBernstein (AB) enjoy sharp price gains in the new year. Bill Miller retires from active fund management at Legg Mason (LM).

The hedge fund and fund of funds industries do not recover in 2009. The Madoff fraud, poor hedge fund performance and renewed controversy regarding private equity marks (particularly among a number of high-profile colleges like Harvard and Yale) prove to be a short-term death knell to the alternative investments industry. As well, the gating of redemption requests disaffects high net worth, pension plan, endowment and University investors to both traditional hedge funds and to private equity (which suffers from a series of questionable and subjective marking of private equity deal pricings at several leading funds). Three of the 10 largest hedge funds close their doors as numerous hedge funds reduce their fee structures in order to retain investors. Faced with an increasingly uncertain investor base, several big hedge funds merge with like-sized competitors in a quickening hedge fund industry consolidation. By year-end, the number of hedge funds is down by well over 50%.

The U.S. stock market rises by close to 20% in the year's first half. Housing-related stocks (title insurance, home remodeling, mortgage servicers and REITs) exhibit outsized and market-leading gains during the January-to-June interval. Heavily shorted retail and financial stocks also advance smartly. The year's first-half market rise of about 20% is surprisingly orderly throughout the six-month period, as volatility moves back down to pre-2008 levels, but rising domestic interest rates, still weak European economies and a halt to China's economic growth limit the stock market's progress in the back half of the year.

A second quarter "growth scare" bursts the bubble in the government bond market. The yield on the 10-year U.S. Treasury note moves steadily higher from 2.10% at year-end to over 3.50% by early fall, putting a ceiling on the first-half recovery in the U.S. stock market, which is range-bound for the remainder of the year, settling up by approximately 20% for the 12-month period ending Dec. 31, 2009. Foreign central banks, faced with worsening domestic economies, begin to shy away from U.S. Treasury auctions and continue to diversify their reserve assets. By year-end, the U.S. dollar represents less than 60% of worldwide reserve assets, down from 2008's year-end at 62% and down from 70% only five years ago. China's 2008 economic growth proves to be greatly exaggerated as unemployment surprisingly rises in early 2009 and the rate of growth in China's real GDP moves towards zero by the second quarter. Unlike more developed countries, the absence of a social safety net turns China's fiscal economic policy inward and aggressively so. Importantly, China not only is no longer a natural buyer of U.S. Treasuries but it is forced to dip into it's piggy bank of foreign reserves, adding significant upside pressure to U.S. note and bond yields.

Commodities markets remain subdued. Despite an improving domestic economy, a further erosion in the Western European and Chinese economies weighs on the world's commodities markets. Gold never reaches $1,000 an ounce and trades at $500 an ounce at some point during the year. (Gold-related shares are among 2009's worst stock market performers.) The price of crude oil briefly rallies early in the year after a step up in the violence in the Middle East but trades in a broad $25 to $65 range for all of 2009 as President Obama successfully introduces aggressive and meaningful legislation aimed at reducing our reliance on imported oil. The price of gasoline briefly breaches $1.00 a gallon sometime in the year. The U.S. dollar outperforms most of the world's currencies as the U.S. regains its place as an economic and political powerhouse."

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